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Meaning Of Apparent Insolvency

Volume 84: debated on Monday 28 October 1985

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The Lords have disagreed to the amendments made by the Commons in page 8, line 14, leave out from 'debt' to 'has' in line 16 and insert

'of (or debts the aggregate of which is) a relevant amount,'.
and in

page 8, line 23, at end insert—

'(1A) In subsection (1)(d) above, "a relevant amount" means not less than—
  • (a) £750; or
  • (b) such sum as may be prescribed.'.
  • and have made the following amendments to the Bill in lieu thereof:

    Amendment No. 1. in page 8, line 14, after second "a" insert "liquid".

    Amendment No. 2, in page 8, line 15, after "amounts" insert

    "(or liquid debts which in aggregate amount)".

    4.46 pm

    I beg to move, That this House doth not insist upon the amendments made by the Commons to page 8, line 14 and page 8 line 23 and that the House doth agree to amendments Nos. 1 and 2, made by the Lords in lieu of those amendments.

    With this it will be convenient to take Lords amendment No. 4.

    Amendments Nos. 1 and 2 have the effect of providing that a creditor will only be able to use the procedure under clause 7(1)(d) if the debts making up his £750 are liquid debts. The meaning of the term "liquid debt" is a matter for the common law. In essence it means a debt that is of a certain settled amount which is constituted in writing by decree or probative document or is admitted by the debtor. This will constitute a considerable safeguard for the debtor and was suggested by the Scottish Consumer Council.

    Amendment No. 4 restores the position to what it was previously. It makes it clear that the debtor need only deny that there is a debt or that the sum claimed by the creditor is immediately payable. That simplifies the position for the debtor.

    The Opposition are happy and content to accept the Government's position not just on this amendment but on all the amendments selected. I am sure that the Scottish Consumer Council would wish me to pass its thanks to the Solicitor-General for the considerate way in which he has studied their representations. That is true of representations made by various other organisations. When we discussed the Insolvency Bill I said to myself—I can put it on record now — that the miracle is that both the Bills have reached this happy state today, because both Bills were in Committee at the same time. One was subject to amendment as a result of what was happening to the other and at one stage no one would have believed that the Government or anyone else—I do not say this critically —could have produced the sensible proposals that are contained in the Bill.

    Question put and agreed to.

    Lords amendment No. 2 agreed to.

    Lords amendment No. 3: The Lords have agreed to the amendment made by the Commons in

    page 8, line 16, after 'debtor', insert by recorded delivery,'.

    with the following amendment—

    Leave out "recorded delivery" and insert

    "personal service by an officer of court"

    I beg to move, That this House doth agree with the Lords in the said amendment.

    I am grateful to the hon. Member for Falkirk, East (Mr. Ewing) for his remarks on Lords amendment No. 1. What I have to say about this amendment will be in the same category. As the hon. Gentleman rightly said, there were a number of difficulties in Committee when we had two sets of important changes to this area of law proceedings in parallel. It is a matter of enormous relief, not only to myself but to the draftsmen of the Bill, that we should have reached this stage of the Bill today.

    This amendment alters the method by which a demand under clause 7(1)(d) will have to be served upon a debtor from one of service by recorded delivery to one of personal service by an officer of court. This is to ensure that a debtor is capable of being constituted apparently insolvent by this method only if he has personally received the statutory demand. In making this change, we have taken due account of the points raised on Report by the right hon. Member for Glasgow, Govan (Mr. Millan) and the hon. Member for Glasgow, Garscadden (Mr. Dewar). The requirement of personal service will help to alert the debtor to the seriousness of a demand under this provision. I hope that this change will allay many of the anxieties expressed by the Opposition.

    The procedure introduced under clause 7(1)(d) will nevertheless remain a technique that could be used successfully in bankruptcy law in Scotland and from time to time avoid unnecessary expense, allowing what remains of a debtor's estate to be readily distributed among the creditors.

    I welcome the remarks of the Solicitor-General and proffer the apologies of my right hon. Friend the Member for Glasgow, Govan (Mr. Millan) who is absent on Council of Europe business but who particularly asked me to welcome this provision. Although it may seem a minor provision and may not be used very often, it is nevertheless very important in situations where the apparent insolvency of the debtor has to be established by a particular method.

    My right hon. Friend the Member for Govan as well as the Institute of Chartered Accountants regarded it as important that the recipient should be conscious that he was receiving a notification that would establish his insolvency. The original proposal for notification by recorded delivery letter seemed to leave something to be desired. We are therefore grateful to the Government for going along the path suggested by my right hon. Friend the Member for Govan and my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) and requiring that an officer should serve the notice. The recipient will thus be fully conscious of the importance of the notification. I am grateful to the Solicitor-General for agreeing to these proposals.

    Question put and agreed to.

    Lords amendment No. 4 agreed to.